Estimated Savings From Michigan’s 1997 State Employees Pension Plan Reform

In 1997, Michigan lawmakers moved employees in one of the state’s pension systems from a defined benefit system to a 401(k)-style system. Richard Dreyfuss analyzed the financial results this had for the state and taxpayers, concluding that in the first 13 years of the switch, it saved $167 million in normal pension costs, $2.3 to $4.3 billion in unfunded liabilities, and unquantifiable sums in better political incentives related to pension spending. Drefuss publishes this study for the Mackinac Center for Public Policy.